Why are oil stocks down today?

[dan_s]

Trading Economics:
"WTI crude futures retreated to around $85 per barrel on Friday after hitting a fresh 7-year high of $87.1 in the previous session, as an increase in crude and fuel stockpiles prompted investors to take profits from the rally. According to official data from EIA, crude inventories in the US rose by 515,000 barrels last week, rising for the first time since November and defying market expectations for a 938,000 barrel drop. Gasoline stocks also increased to an 11-month high of 246.6 million barrels, while refinery runs declined slightly and pointed to lower demand for crude. Oil markets were also dragged by a global selloff in equities as investors reduced exposure to risk assets on prospects of higher interest rates. Meanwhile, oil prices have gained more than 10% so far this year as strong demand and supply constraints significantly tightened the market."
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After a big run up during the first two weeks of January, some "profit taking" is normal. Traders just needed a little negative news to hit the sell button. In my opinion, WTI has gotten a bit ahead of itself but supply/demand fundamentals still point to higher oil prices in Q2. Over the next 100 days (by end of April), demand for oil will go up ~2 million bpd (happens each year) and maybe a lot more if we truly get out of the Pandemic of Fear. US and OECD petroleum inventories are too low to support an economic rebound.

As I said on today's podcast, most upstream oil & gas stocks are trading as if WTI was $60/bbl and ngas was $2.50/mcf. Q4 results are going to be good and year-end reserve reports should show that these companies are still very under-valued by the market.